The effect of Brexit on recruitment in the UK tourism industry, and how you can prepare

tourism, brexit, UK

The tourism industry is vital to the UK economy. Tourism is a major contributor to employment across the country, working hand in hand with a number of different industries from entertainment to travel to retail. Visit Britain estimates that by 2025, the UK will have a tourism industry worth over £257 billion. 

That being said, there’s a growing concern that proposed Brexit immigration plans, set to come into force in 2021, will result in staff shortages and even closures for tourism businesses. 

Though there is still uncertainty about what the Brexit deal will be, and how it will directly impact all businesses, there are ways in which you can be prepared for any outcome.

What are the proposed immigration changes?

From 2021, the government plans to implement a salary-assessed system for workers in all industries being recruited from outside the UK. 

The minimum-salary required for a visa to work in the UK is set to be £30,000 a year.

  • Workers from the EU already residing in the UK will need to apply for a status via the EU Settlement Scheme in order to continue working. Anyone who hasn’t applied by 2021 will be subject to the new salary-assessed rules. 
  • There will be a transitional period, whereby new low-skilled workers can apply to work in the UK on a 12-month visa, but those workers will not be permitted to reapply at the end of the twelve months. 

What are the challenges?

How to fill the low-skilled jobs

The average salary of a worker in the tourism industry is estimated to be £17,000, meaning that many UK workers wouldn’t reach the proposed requirements for a permanent visa, let alone workers coming from outside the UK to take up low-skilled jobs. 

It’s filling the low-skilled jobs that tourism business owners are most worried about. The fear is that it’ll become exponentially more difficult to employ staff for jobs categorised as ‘low-skilled’ post brexit. These are bar, house-keeping and front of house staff.

Recent research from UKinbound and Canterbury Christchurch University found that almost half of the tourism businesses in London rely on EU nationals for more than half of their workforce. 

The challenge to recruit staff for low-skilled jobs isn’t necessarily a new one. However, with EU workers taken out of the equation, business owners fear they will encounter even more of a difficulty in recruiting UK workers, who are less likely to apply for minimum wage, low-skilled jobs. 

The demand for foreign language speakers

The secondary problem you may face is the demand to find UK workers with the foreign language skills required in some tourism roles. Since the EU referendum, the government has been called upon to recognise that language skills are key skills that will be put at risk if and when a brexit deal goes through. 

UKinbound have called for:

  • Language skills to be added to the occupation shortage list
  • The salary threshold proposed to be regionally set, to take into account lower salaries in tourism hotspots outside of the capital
  • A quarterly independent review to assess the effects on the tourism industry

How you can prepare

We appreciate that it’s difficult to be fully prepared on ‘what if’s’. When we have a solid conclusion on the ins and outs of a brexit deal (or no deal), we’ll advise on the best steps to take. However, there are ways in which we can help you be prepared now, regardless of what the outcome is. 

  • Understand your finances now, and calculate the potential risk 

For a start, we can make sure your finances are in the best shape now, and look for ways in which you can improve on the efficiency and profitability of your business. We’ll ensure you’re making the most of tax reliefs available to you, and create forecasts to predict cash flow and profit in the coming years. When you know how your business is performing, and how it is predicticted to perform, you can anticipate future pitfalls, and can plan ahead of them instead of being surprised by them. 

  • Look at the current skills gaps in your business

When you know your financial position now, and you have accurate and effective forecasting, you can begin to look at the skills gaps you have and plan for how you might fill them. You may be able to strategise ahead of time to get the most out of your existing workforce, or run an informed hiring campaign to begin looking for UK workers for your low-skilled jobs. You’ll also have more of an understanding of the budget you’ll have for salaries.

  • Stay up to date with HMRC’s preparation advice for a no-deal brexit 

As we wait to hear more about the brexit deal, it can be helpful to keep an eye on the advice from HMRC should we be looking at a no-deal brexit. The checklist is designed to help you think proactively about your existing employees, customers and business infrastructure. 

Instead of worrying ahead of time, put plans in place ahead of time. Brexit aside, it’s our job to help our tourism clients stay informed and empower them to build a strong business that can survive any roadblocks that come their way. Take a look at our tourism specific page to see how we do that. 

Need to hire a bookkeeper? It may not not be the best decision for you, and here’s why

bookkeeping, cash flow, hiring

As the owner of a small growing business, you’ve probably got to the point where you can no longer handle all your accounting tasks alone. If you haven’t got there already, you will. 

In our experience working with small business owners, when you get to this point, your first thought will be to look for a bookkeeper to hire. 

As a firm of accountants, you’d imagine we’d be telling you to go for it! And yes, of course, when you’re time poor, getting some support will lighten the load. 

We want our clients to get the help they need with their finances, so they can get back to doing what they love. But the reality is, for many businesses, hiring a bookkeeper in-house may not be the most cost effective move. 

We want to make sure you’re not just getting any support, you’re getting the right kind of support, so that you don’t bring yourself further stress. 

First of all, you need to assess whether you’re really ready to hire in-house. 

Reasons you may not be ready to hire in-house

You’re not big enough for a full time employee, and it’ll be a financial risk 

There will come a point where hiring in-house staff is necessary. You will get there. That being said, hiring staff is expensive – and it may not be the most financially smart option for you right now. 

When you hire an employee, you will need to factor in the associated costs:

  • Their wages – for full time or part time work
  • Their benefits and entitlements – Holiday pay, sick pay, maternity/paternity pay
  • Legal responsibilities – PAYE, Auto-enrolment
  • The cost of training – Any courses they may need to take or learning to complete
  • Overheads and equipment – Office space, computer, the cost of accounting software for your bookkeeper to use.

That’s not to mention the time and cost of the hiring process. In order to find the right person, you will need to sacrifice some of your own time for CV reviews, interviews, and getting someone up to speed with how the business works when they start. 

We often see clients jumping the gun before they have a hiring process designed to attract and retain the right kind of people, which brings us to the second reason you may not be ready. 

Your hiring process isn’t where it should be, meaning you may hire the wrong person

What you really don’t want, is to hire the wrong person and find your books in a mess down the line. Your hiring process is about more than simply finding someone with the desired experience. You’ll want to:

  • Hire by your company values and culture – not just by experience. The right person in skills can still be the wrong person in attitude and personality.
  • Test their skill – give them a complete tester project or come in for part of a day to see how well they can do the things you require of them, and what their approach to the work is. You’ll want to look at more than just their competence in accounting, but also their approach to project management and organisation. 
  • Decide who is going to be directing them – How involved are you going to be in the new person’s day to day? Who will be in charge of employee reviews, training and leadership?
  • Assess what you will need to train them in – It’s great to get someone in with the skillset to fill the gap in bookkeeping, but what else will they need to know about your company and it’s internal processes, your clients and customers to do the job?

Think also about the cost to you and your business of hiring the wrong person. A thorough strategic hiring process is your protection from unnecessary stress in the future. 

The alternative option: Outsourcing 

What if you could get full time work for less than all the accumulated costs of a part time in-house employee. This is the argument for outsourcing. 

If you’ve got this far in the blog and you’re thinking ‘I am definitely not ready’ then don’t despair! It doesn’t mean you’re going to be stuck where you are, desperately trying to find time to get everything done. It just means you need to consider a different approach. 

The benefits of outsourcing:

  • You may have the expertise of a whole firm – Most often when you outsource your bookkeeping, you’re doing so to a firm of certified bookkeepers and accountants. In this case, you won’t need to think about providing training. With an expert at hand, it also gives you more freedom to pull yourself out of the finance function, leaving the books in trusted hands. 
  • You won’t have to budget for all the employee costs – You’ll likely be paying a monthly fee, but it won’t directly be someone’s salary, and therefore you won’t need to be paying for employee benefits. 
  • You can get work done when you need it – When you outsource work to a bookkeeper, you have more freedom and flexibility on the amount of time you invest in. The cost will be based on what you need per month, and it’s likely there’ll be add-on options if you need extra support. 
  • They’ll come equipped with the best tech – This one is key! There are some brilliant cloud accounting software options out there now. We love Xero for many reasons – the most fundamental of which is that it allows you to see your updated numbers in real time, allowing you to make more informed faster decisions. An outsourced bookkeeper will already be equipped with the kind of tech that speeds up the ‘doing the books’ part, and frees up more time for them to give you more value.
  • You have an external advisor – You may find that an experienced outsourced bookkeeper can bring more to the table than bookkeeping skills. Your bookkeeper can give you strategic advice on how to run and grow the business, based on what the numbers are telling them. 

When hiring a bookkeeper becomes a good financial decision

There may come a point where you have the budget for an experienced bookkeeper, the hiring process to attract them, and the infrastructure to support them. Great!

If you’re not there, outsource the bookkeeping to an experienced team, so that you can spend your time building your business up to the point where you’re ready to take on staff. 

Want to know exactly what you can outsource? Take a look at how we do things here.

New year’s resolutions to save tax

The start of a New Year is the time we think about New Year’s resolutions. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.

An obvious tax planning point would be to maximise your ISA allowances for the 2019/20 tax year (currently £20,000 each).

You might also want to consider increasing your pension savings before 5 April 2020 as the unused annual pension allowance is lost after three years.

For those looking to do some inheritance tax planning it would be a good time to review (or make) your Will.

PENSION PLANNING

For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and their employer. Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current tax year, but then lapses if unused.

Hence the unused pension allowance for 2016/17 will lapse on 5 April 2020 if unused. Note that under the current rules the net after tax cost of saving £10,000 in a personal pension for a higher rate taxpayer is only £6,000.

GIFTS OUT OF SURPLUS INCOME

There is currently a very generous exemption from inheritance tax for regular gifts out of income. In order to qualify for the exemption it is important to set up regular transfers and to be able to prove that after those regular gifts you are left with sufficient income to support your normal lifestyle.

We can assist you in taking advantage of this generous exemption and keeping the necessary records for HMRC.  The regular payments could for example be used to fund school fees for children and grandchildren.

PASSING ON THE FAMILY HOME

When fully phased in from April 2020, an additional nil rate band of up to £175,000 is available on death where your residence is left to direct descendants.

This is on top of the normal £325,000 nil rate band.

The residence nil rate band is however restricted if your assets exceed £2 million. The rules are fairly complicated but we can review your personal circumstances to enable you to take advantage of all the relief that you are entitled to.

Note that the additional inheritance tax relief is available even when you downsize to a smaller property or move into care, provided assets of equivalent value are left to direct descendants in your Will.

The additional nil rate band for passing on the family home should be taken into consideration when drafting your Will and we can work with your solicitor to make sure your Will is tax efficient.

How we helped Lake District Foundation (LDF) in December

As a business we support the Lake District Foundation. We help them to fund projects that protect our wonderful environment., heritage and wildlife. This is how we helped in December 2019. Grants were awarded to the following local projects.

Growing Well School Farm visits Programme 2020 School children will be invited to visit their site at Sizergh Farm to learn how food is grown, what it needs to grow, get hands on in an activity, and discover other wildlife, inspiring future generations to get involved in horticulture and the natural world.

Bee Hide Project (Heron Hill School) will provide a safe, inclusive, viewing area for the children and the wider community to enjoy and learn about bee keeping and the importance of bees in our ecosystem.

Herdwick Sheep Breeders Society was awarded funding for the repair of their marquee which suffered storm damage. This is vital to the future of our local shows and links strongly to our World Heritage status.

Wildlife and Heritage Garden (Calderbridge and Ponsonby Communities) aims to rejuvenate the community areas to attract more wildlife and in so doing bring together different generations

 

Swifts in the Community (SITC) have an army of volunteers who monitor the numbers of nesting swifts, which are in decline due to modern building design. They also give lots of local advice about how best to support these world travellers.

Staveley Woodlands (Cumbria Wildlife Trust) is a recently extended nature reserve. The project will involve walling off a section of land, hedging and the installation of bird and bat boxes, as well as creating a trail guide and way markers to guide people around the reserve.

`Space Invaders’ (South Cumbria River’s Trust) This is an ongoing project aimed at eradicating Invasive Non-Native Species (INNS) such as Himalayan Balsam, and allowing native wildlife to thrive.

Farming with Nature (Ullswater Catchment CIC) will see 40 wooden cages, each planted on farmland with one oak tree and surrounded by other scrub plants, providing habitat for other wildlife. The trees will help to improve soil structure and aid flood management.

Coniston Wildflower Meadow (Coniston Parish Council) will see the community space in the centre of the village turned into a beautiful wildflower meadow.

Making Tax Digital for VAT (MTDfV) Update

Most VAT registered businesses that have a turnover above the VAT registration limit of £85,000 should now have filed at least their first VAT return under MTD. There are VAT registered entities who were given a deferment to filing, with most of these in the process of beginning to file under MTD.

The one biggest hurdle we have found is often the “jump” from manual records to software. More often than not, the manual records were of good quality and moving to software should not have any impact on the VAT payable/reclaimable.

By using software to file a VAT return, there are other benefits – it can save the keys on a calculator for one. There are many MTD compatible software programmes available, and they do not have to be “cloud based” i.e. via the internet. All that is required is the ability to file a VAT return from a piece of software via the internet. For this reason, some clients prefer their accounting data to be “offline” (desktop based) and only use the internet to file VAT returns. This can be of use with poor internet speeds, which is not uncommon in some rural areas.

HMRC do have periods of MTD being unavailable due to maintenance. These periods tend to stay clear of filing deadlines and are mostly through the night, so for the vast majority, there should be no delays in filing MTD VAT returns.

There are no plans to introduce MTD to smaller businesses until at least April 2020. With a General Election looming, this is subject to change. This could mean non VAT registered entities could need to file under MTD too.

If you need to know more about MTD for VAT or what software we would suggest for your business, please contact us.

Will Robinson, Accounts Manager, Carlisle Office

 

Get on your bike! Using the cycle to work scheme

The government has recently announced that the previous £1,000 limit on the cost of a bicycle provided under the cycle to work scheme has been removed. This will apply where the employer uses a firm authorized by the Financial Conduct Authority (FCA) to hire out cycles to employees who use them to commute to work.

Note that where the cycle is provided under a salary sacrifice arrangement there continues to be no taxable benefit if the amount paid by the employee is within HMRC approved limits. Note that where the bicycle is transferred to the employee after 6 years HMRC accept that value is negligible.

SALARY SACRIFICES

The provision of a bicycle to employees under the governments cycle to work scheme is an exception to the general rule introduced from April 2017 where the amount taxable is the greater of the salary foregone and the taxable benefit as set out in the tax legislation.

Other exceptions to the general rule include employer pension contributions and childcare vouchers.

Please get in touch for further details.

Why we care about the mental health of our farmers

farmers, stress, cash flow

Last month, a few of the Saint Team attended Xerocon in London, to catch up on software news and updates, and hear insightful talks about how we can help business owners to connect, both through the use of technology and on a personal level. 

The theme at this years’ conference was people. The conversation centred around the wellbeing of our staff and our clients, and the humanity involved in helping a business to thrive. 

It’s so refreshing to witness and be a part of the mental health conversation in the accounting industry. We work day-in, day-out with business owners who have made the brave step to do what they love. Your business is your life. And whilst it can be extremely rewarding to own a business, it can also feel distressing and overwhelming when you’re faced with challenges that have a direct impact on your home life.

Let’s talk about our Farmers

We’re paying particular attention to our farmers. Whilst Farmers care about their livestock, who’s caring about them?

The Office of National Statistics recently reported that suicide rates of agricultural workers are among the highest in any occupational group. According to the National Farmers’ Union (NFU), crisis networks are seeing more and more calls come in from Farmers in need of emotional support. 

As a Farmer, you’re in a unique position where your business and home life are inseparable. Your business literally is your home. 

We understand how stressful it can be when:

  • You’re working long hours – often far more than the average 37 hour week, making it hard to find a balance between work and your personal life.
  • Business is home and home is business – meaning you can struggle to physically escape your workload and the worries that may accompany it. 
  • Uncertain times leave you feeling out of control – Whether it be political changes or a period of bad weather, not being able to predict how your business will be affected can cause panic. 
  • You’re feeling the cash flow pressure – there’s a growing need for better forecasting and financial planning to take investment opportunities without crippling your cash flow, and to manage the pitfalls of pricing changes. 

Finance is the biggest source of stress

Like many business owners, one of the most common worries is uncertainty around finances. Unlike many other businesses, however, farming is unique. Your income relies on a living growing product, and often requires large investments in the land and the machines that sustain that living product. 

We get it – because for many of us at Saint & Co, the farming industry is literally in our blood. We understand the challenges you face, and how these can often feel insurmountable. We’re committed to make sure that our farmers feel financial safe and secure, no matter the outside circumstances. When we partner with you, we really get to know you and your farm, so that you:

  • Gain an expert understanding of your accounts and how they can be used to drive the business forward – understanding your accounts is key to being able to manage your farm with efficiency, and means far more to your success than just ticking boxes for HMRC.
  • Know price fluctuations in livestock and crops will affect your profit in real life terms – and most importantly, how to manage those fluctuations effectively. 
  • Make the most of farming legislation changes – by knowing what’s going to change, what government schemes and incentives are available to you, and by operating the most tax-efficient business at all times.
  • Can proactively plan for changes in tax – So that seasonal dips in production and sales won’t have a negative impact on your cash flow. 

It’s our job to support you

We believe in building a long-lasting relationship with our farmers so that we can see them through the challenging times and ultimately help them achieve sustainable growth long term. 

Take a look at our dedicated page for farmers where we talk more about how we help. You can also see the faces of the specialists on our team, many of whom come from farming families themselves. 

We’re not just numbers people – we’re people people, and it’s our job to alleviate the stress that comes with dealing with the finances, and looking after the business side of things so that you’re able to look after you. We care about your wellbeing, and the wellbeing of your family. Please do reach out for a conversation if financial worries are getting you down.

Xero accounting software overview

Xero is cloud based (access via the internet) accounting software for small and medium businesses. Designed for ease of use, it can either be cashbook analysis, such as analysing the bank and petty cash, or full software having debtors, creditors, bank analysis and much more. As long as you have an internet connection, you can access the live software from anywhere and a smartphone app can raise invoices on the go, or see if someone has paid their bill – great for sales rep’s and trades businesses.

Sales invoices can be emailed, and with the bank transactions kept up to date, automatic debt chasing via email really does help collect the debts in, in turn helping cash flow.

If you use multi-currency, for a small monthly fee, the headache of working out exchange rates is a thing of the past – daily rates for around 160 currencies are populated from XE.com – enter the amount in the relevant currency and Xero converts back to sterling (or whichever currency is set as the base currency). Exchange rate gains/losses are calculated and entered automatically once an invoice is paid.

Bank feeds are recommended, although not essential. A bank feed is where your bank transactions automatically come into Xero on a daily basis helping you be right up to date with debtors and creditors – know who owes you and who you owe every day. If you are an internet trader, Paypal bank feeds may be of interest – your Paypal account becomes a bank account and with automation can speed up data entry.

Although Xero is good software, it is a “one size fits all”. If you want something tailored to your sector, there are more than 800 different apps. These range from manufacturing, stock control, staff time sheets, legal work and farming to simple mileage logs. All link to Xero in one way or another and are designed to make businesses record keeping easier. While these generally are an extra cost (some are free) they can pay for themselves due to time saving – to find out more, go to https://apps.xero.com/uk

If you have employees, the payroll function of Xero may be of interest. Process basic payroll for your employees and file with HMRC – you can also file directly with NEST pensions. The Xero payroll functionality can be used for most employees, be it hourly pay, overtime, salary, deductions or bonuses.

Once the data is entered, a multitude of different reports provide all the essential reporting a business may require. Filing VAT returns is literally clicking a few buttons.

If you want to know more about Xero, then please contact our Xero team.

Will Robinson Accounts Manager, Carlisle

Gifts to charity

Where possible higher rate taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity and for the individual to obtain additional tax relief on the payment.

For example where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing the net cost of their donation to £15.

Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will taxed on the shortfall.

Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell the donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations.

It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.

Election tax proposals – more money for the NHS?

The various political parties have all made bold promises in the run up to the General Election about increased spending if elected, particularly extra money for the NHS. Although many of the spending pledges will be funded out of increased borrowing, the parties have assumed that they can persuade voters that extra spending on the NHS should come from general taxation.

The Liberal Democrats policy would be to increase the rate of income tax by 1% to raise £35 billion a year for the NHS and social care. The Conservative and Labour parties propose to provide extra money for the NHS from corporation tax changes.

BORIS JOHNSON TO DELAY 17% RATE OF CORPORATION TAX

Corporation tax is scheduled to be reduced from 19% to 17% from 1 April 2020.

However, in a speech to the CBI on 18 November Boris Johnson announced that, if elected, the Conservative Party would keep the rate at 19% to provide an extra £6 billion for the NHS.

Despite Jeremy Corbyn telling the CBI that the Labour party is “not anti-business” the party have previously announced that they would reverse the recent cuts in corporation tax. Note that the rate of corporation tax was 28% back in 2010 at the end of the last Labour government.

MORE MONEY FOR SOCIAL CARE?

In every General Election since 1997 there have been pledges by the various political parties to resolve the funding of care for the elderly in the UK but yet nothing has happened. It even sparked a dramatic U-Turn by Teresa May in 2015 with her proposal for a so-called “dementia tax”. With the care system in crisis it will be interesting to see what the different political manifestos promise to solve the problem.

Although not strictly a tax matter, for many families funding care fees for the elderly is a bigger issue than inheritance tax (IHT). The current rules in England and Wales require the family to make a contribution to care fees where the person’s assets exceed £23,250, including the value of the family home.

The normal IHT planning strategy of giving wealth away and surviving for seven years does not necessarily work as the social care rules are based on the concept of “deliberate deprival” of the estate.

If the local authority consider that the transfer of assets was done deliberately to deprive the estate of assets to avoid paying care fees, then the transfer is ineffective.